Insurance Glossary

Your online insurance dictionary

In Marine insurance this gives an insured the right to abandon lost or damaged property and still claim full settlement from an insurer subject to certain restrictions.
For example, until the 1980s the Titanic which sank off Newfoundland in 1912, was deemed to be unrecoverable and the Commercial Union Assurance Company had paid its owners for this loss due to sinking.

Accidents

What does ’accident’ really mean when it comes to policies covering ’accidental injury’ or ’accidental damage’?
Primarily, it means that such policies cover events that are not deliberately caused by the policy holder and that are not inevitable. Deliberately driving your car into a wall is not an insured ’accident’. If you jump off a high building, the inevitable injuries you suffer cannot be counted as ’accidental’, and you may not be able to claim any insurance.

Act of God

Natural occurrence outside human control such as earthquake or typhoon. Contrary to popular opinion these can be specifically included in most insurance policies.

Actuaries

An actuary is an expert human computer who applies mathematical theories of probabilities and statistical techniques in risk calculation. Previously seen only in relation to life assurance, we now know we need general insurance actuaries, particularly in relation to loss reserving and premium calculations.

Acquisition Cost

How much it costs insurers to obtain and write new business. It would include intermediaries’ commissions, underwriting and policy issue expenses.

Additional Perils

These are provisions that can widen the scope of basic insurance policies, for example, Fire policies, which often restrict coverage to a limited range of perils, such as fire, lightning and explosion. These provisions are sometimes called Special Perils and may include, for example, losses caused by storm, flood or damage by aircraft.

Adjustable Policies

Could you tell me today exactly what your payroll, turnover or average stock value on your premises will be in the next 12 months? I doubt it. But what happens if your insurance premiums are to be based on these figures? Often, the premium has to be based upon realistic estimates. Under an adjustable policy, these estimates can be adjusted appropriately, upwards or downwards, at the end of the period of insurance, when the actual figures are available.

Adjuster

A person who carries on the business of investigating the cause and circumstances of a loss and ascertaining the quantum of loss.

Advance Profits Insurance

This term refers to Business Interruption insurance arranged in advance of the commencement of the insured’s business. Such policies are usually taken out to guard against the potential of a delay in putting a plant into operation, caused by loss or damage affecting the buildings or key plant at any stage of the business set-up.

Agents

Someone who sells and services insurance policies on behalf of insurers. In many countries agents can only represent either one or a limited number of insurers as opposed to brokers who have a free rein. Agents often obtain their clients from friends and relatives and therefore tend to have a personal knowledge of the client.

Aggregate Limits

Certain polices, notably liability and medical expenses, contain not only a limit per claim, but also an aggregate total amount during the policy period.

AIDS

The clinical manifestation of AIDS (Acquired Immuno-deficiency Syndrome) must be supported by the results of a positive HIV (Human Immuno-deficiency Virus) antibody test and a confirmatory Western Blot test. In addition, the life Insured must have a CD4 cell count of less than two hundred (200) and one or more of the following criteria are met:
i. Weight loss of more than 10% of body weight over a period of six (6) months or less (wasting syndrome);
ii. Kaposi Sarcoma;
iii. Pneumocystis Carinii Pneumonia;
iv. Progressive multifocal leukoencephalopathy;
v. Active Tuberculosis;
vi. Less than one-thousand (1000) Lymphocytes
vii. Malignant Lymphoma.

Aircraft Damage

An ’Additional Peril’ under a Fire policy. Covers not only the unlikely prospect of a plane crashing into your building, but damage caused by articles falling or dropping therefrom.

All Risks

This is a slightly misleading name for the types of insurance which provide wide cover but evertheless contain a number of exclusions depending on the risk. In other words, the term ’All Risks’ should not be taken too literally, but policy wordings should be read thoroughly.

All Risks Coverage

This is often used for the insurance of valuable items such as jewellery. In Marine Cargo Insurance, a new easier-to- understand wording known as Institute Cargo Clauses (ICC) ’A’ is steadily replacing the out-of-date ’All Risks’.

Alzheimer

Deterioration or loss of intellectual capacity or abnormal behavior as evidenced by the clinical state and accepted standardized questionnaires or tests arising from Alzheimer`s Disease or irreversible organic degenerative brain disorders resulting in significant reduction in mental and social functioning (such that continuous supervision is required). The diagnosis must be clinically confirmed by a neurologist. The following are excluded:
• Non organic brain disorders such as neurosis and psychiatric illnesses and
• Drug or alcohol related brain damage.

Angioplasty and other invasive treatments for major coronary artery disease

Means the actual undergoing for the first time of Coronary Artery Balloon Angioplasty, artherectomy, laser treatment or the insertion of a stent to re-vascularise a narrowing or blockage of one or more coronary arteries as shown by angiographic evidence. Intra-arterial investigative procedures are not included. Payment under this clause is limited to 10% of the Critical Illness coverage under this policy subject to a maximum of RM 25,000. This benefit is payable once only and shall be deducted from the amount of this Contract, thereby reducing the amount of the Lump Sum Payment which may be payable herein.

Annuity

A contract that provides for a stream of periodic income for a term dependent upon human life.

Arbitration Clause

This clause is found in the Conditions of many property policies. Any difficulty that the insurer and insured may have in agreeing on the amount of a claim can be referred to independent arbiters rather than going through the Courts.

Architect’s, Surveyor’s and Consulting Engineer’s Fees

This is a provision to cover costs that are not always automatically covered by insurance policies. It is customary for insurance buyers to extend building and machinery cover accordingly. Fees arise necessarily from repairing or reinstating damaged buildings.

Assignment

The transfer of ownership rights of a life insurance policy to another party.

Automatic premium loan

A loan granted by a life insurance company to a policyholder using the cash value of the life policy to pay any premiums due at the end of the grace period of the same policy. The loan is automatic as allowed under one of the provisions in the life policy.

Average

In insurance, ’average’ has several meanings, depending upon the context in which the word is used.
You are most likely to encounter this word when you suffer a property damage loss. If a policy is said to be ’subject to average’, it means that if the sum insured at the time of the loss is less than the actual value of the property, then the amount of loss claimable under the policy will be reduced in proportion to the extent to which you have under-insured the value of the property concerned. This can come as a bit of a shock to the consumer.
In Marine insurance, however, ’average’ means loss, while ’particular average’ means partial loss. See also ’General Average’.

B

Bailee’s Liability

Covers legal liability resulting from damage or destruction of the bailor’s property whilst under the bailee’s temporary care, custody and control. For example, a suit being cleaned is under the temporary control of the bailee (cleaner). The bailor (owner) expects the suit to be returned in good condition. If the suit was stolen from the cleaners, the bailee’s Liability insurance would cover the loss.

Banker’s Blanket Bond

Wide form of cover available to Banks which includes Theft and Fidelity Guarantee risks. This is a specialist insurance written mostly in the London market.

Bid Bond

Sometimes required by a developer from a contractor submitting the lowest bid on a project. If the contractor subsequently refuses to undertake the project, then the bid bond will pay the developer the difference between the lowest and the next lowest bid. Its aim is to ensure contractors make serious bids.

Bloodstock Insurance

Applies only to horses kept for racing or breeding purposes (as opposed to Livestock insurance). It provides financial protection against death from sickness or diseases and accidents, including fire and lightning. It can also cover theft and malicious acts.

Boilers and Pressure Plant Cover

All boilers and vessels subject to internal pressure or vacuum should be insured against explosion or collapse. The insurance is normally extended to cover damage to surrounding property and third party liability arising from such explosion or collapse.

Bonds

These are, in essence, a financial backstop for a contractor’s guarantee. A person or authority awarding a contract requires protection against the failure of the contractor to meet the terms of the contract. There are many forms of contract in commercial use, for example, performance bonds
(contract guarantees), bid bonds, customs bonds, supply bonds and so on. You may even have heard of maid bonds in certain countries.

Book Debts Insurance

This is also known as Accounts Receivable insurance. It covers the amounts in your account books (debit balances) that you are unable to collect because the books have been destroyed. With duplicate sets of computer records now the norm, this cover is less important to large clients, but small businesses may well need it.

Broker

An insurance intermediary who represents the interests of the client, not the insurance company. In certain countries, use of the word ’broker’ is regulated and the intermediary needs to be a member of the appropriate Brokers Association and meet their minimum requirements. This is to ensure a
proper professional standard, and redress for the client in the event of problems.

Builders Risk Hull Insurance

Covers a boat/ship builder until possession passes to owners.
Usually All Risks cover on the completed value of the property.

Burglary

Usually refers to theft involving forcible or violent entry to or exit from the premises, and is more restrictive than Full Theft cover. If you have a Burglary policy you should check the extent of cover actually provided to make sure it meets your needs.

Bursting or Overflowing of Water Tanks, Apparatus and Pipes

This is an ’Additional Peril’ cover available under a Fire insurance. It covers the damage resulting from a plumbing accident but does not cover the cost of repairing the burst tank or pipe, which is, very often, wear and tear.

Business

An insurance policy covering business enterprises normally only covers you in respect of the ’business’ described in the policy schedule. It is important, therefore, to ensure that your business is fully and correctly stated in the policy, especially if you engage in more than one activity, or run more than one company.

Business Interruption Insurance

This is a very important but often overlooked form of cover and is also known as ’Consequential Loss’ or ’Loss of Profits’ insurance. There are several types of Business Interruption cover. Generally, they are all intended to maintain the income or profit from your business at its expected level despite the impact of a fire or some other unexpected catastrophe insured against, such as explosion.

Business Machines

These should be insured against all risks - that is all the usual perils plus accidental damage. More sophisticated equipment, such- as computers, should be covered against possible breakdown.

Business Travel Insurance

When arranging travel insurance, companies and executives need to consider their own special needs. For example, the company may be faced with a second set of air fares if an executive travelling abroad falls ill and has to send a replacement to finalize an important deal.

Backdating

The procedure for making the effective date of a policy earlier than the application date. Backdating is often used to make the age at issue lower than it actually was in order to get a lower premium.

Bacterial meningitis

Bacterial meningitis causing inflammation of the membranes of the brain or spinal cord resulting in permanent neurological deficit lasting for a minimum period of 30 days and resulting in a permanent inability to perform at least three (3) of the Activities of Daily Living .
The diagnosis is to be confirmed by:
• an appropriate specialist
• the presence of bacterial infection in the cerebrospinal fluid by lumbar puncture

Benign brain tumor

A life-threatening, non-cancerous tumor in the brain or meninges within the cranium, giving rise to characteristic signs of increased intra-cranial pressure such as papilloedema, mental symptoms, seizures and sensory impairment. The presence of the underlying tumor must be confirmed by imaging studies such as CT Scan or MRI. The following are excluded:
a. Cysts
b. Granulomas
c. Malformations in or of the arteries or veins of the brain
d. Hematomas
e. Tumors in the pituitary gland, or spine
f. Tumors of the acoustic nerve

Betterment

A situation where the condition of an insured item has become better following a repair or replacement.

Blindness /total loss of sight

Total and irreversible loss of sight in both eyes as a result of illness or accident. The blindness must be confirmed by an ophthalmologist.

Bodily injury liability

Legal liability for causing physical injury or death to another.

Bonus

This is the extra money paid with the final benefit for participating policies. However bonuses are not guaranteed and depends on the performance of the insurance fund.

Brain surgery

The actual undergoing of surgery to the brain under general anesthesia during which a craniotomy is performed. The following are excluded:
a. Burr hole procedures, transphenoidal procedures and other minimally invasive procedures
b. Brain surgery as a result of an accident

C

Cancellation

Insurers have the right to cancel your policy at any time. However, they have to give the required period of notice, usually between 7-28 days. And they must refund a pro-rata premium, that is, full proportion of the unexpired period. But in practice, mid term cancellation is exceptional. If you cancel, then insurers will charge short period rates, although they may return pro-rata if, for example, you have sold the property insured.

Cancer

Any malignant tumour positively diagnosed with histological confirmation and characterized by the uncontrolled growth of malignant cells and invasion of tissue. The term malignant tumour includes leukemia, lymphoma and sarcoma. For the above definition, the following are not covered:
a. All cancers which are histologically classified as pre-malignant, non-invasive; carcinoma in situ; having either borderline malignancy; or having low malignant potential
b. All tumours of the prostate, thyroid and urinary bladder histologically classified as T1N0M0 (TNM classification)
c. Chronic Lymphocytic Leukemia less than RAI Stage 3
d. All cancers in the presence of HIV
e. Any skin cancer other than malignant melanoma

Captive

This is an insurance company formed primarily to insure the risks of its parent company. Reasons vary from tax savings to the fact that the conventional insurance market does not readily wish to write this type of risk, for example, dangerous chemicals or liability for cigarette manufacturers.

Cargo

This is usually covered under a Marine Insurance policy, whether for domestic or international journeys, by sea, air or land. There are three internationally recognized types of cover, known as ’Institute Cargo Clauses A, B and C’.
These have replaced three old covers with antiquated wordings known as All Risks, With Average (WA) and Free of Particular Average (FPA).

Certificate of Insurance

A piece of paper not to be confused with an insurance policy. It is issued mainly to comply with certain statutory requirements as evidence of cover. A certificate is issued to motor vehicle owners and also to employers under Workman’s Compensation laws. Another type of certificate can be issued under a Marine Cargo Open Cover as evidence that Cargo insurance has indeed been arranged.

Chartered Insurance Institute (CII)

The UK based insurance education body which also operates through worldwide affiliates. This is the main professional examining body for the insurance industry outside the USA.
Insurance personnel who have passed their insurance examinations can qualify as Associates or Fellows of the Institute.

Notification to an insurance company that payment of an amount is due under the terms of the policy.

Co-Insurance

In many British-type insurance markets, co-insurance means the sharing of one insurance policy between two or more insurers. Usually, this entails each insurer paying directly to the insured their respective share of the loss. In other words, the insured has an insurance contract with more than one insurer. This arrangement is cumbersome to administer and is used only on very large risks.

Collision Damage Waiver

Cover that can be purchased by someone renting a car where the rental company waives any right to recover the amount of damage to the car from the individual regardless of fault.

Coma

A state of unconsciousness with no reaction or response to external stimuli or internal needs, persisting continuously for at least 96 hours, requiring the use of life support systems and resulting in a permanent neurological deficit, lasting more than 30 days. Confirmation by a neurologist must be present. Coma resulting directly from self-inflicted injury, alcohol or drug abuse is excluded.

Commission

Remuneration paid to an agent by an insurance company for his services.

Compensation

A certain amount of money given as payment as determined accordingly in response to a claim made by the policyholder.

Computer Insurance

A relatively new type of insurance specially geared to cover delicate and high value computer equipment. Cover is usually on an All Risks basis and can be extended to include the costs of reinstating data, and business interruption cover such as increased costs of working, or loss of revenue/gross profit.

Computer Systems Records

Cover for this is often not available under basic Fire and Burglary policies. You can either extend your cover specifically to protect such records or, alternatively take out a special Computer insurance.

Condominium Insurance

A special policy taken out by owners or management corporations designed to cover the buildings of a condominium, sometimes carrying other benefits, such as Liability insurance for the management corporation or committee, plus Errors and Omissions cover.

Consequential Loss

An alternative name for Business Interruption or Loss of Profits insurance.

Constructive Total Loss

Partial loss of such significance that the cost of restoring damaged property would exceed its value after restoration. For example, a car is so badly damaged by fire that repairing it would cost more than the repaired vehicle would be worth.

Contingent Liability

This is where a liability is incurred by a business for acts other than those of its own employees. If an independent contractor is hired to carry out some work, then the business may be held liable for the negligent acts of the contractor if the contractor is acting under the direction or control of an employee of the business.

Contract of Indemnity

Property insurance that restores the insured to his original financial condition after suffering a loss. The idea is that the insured cannot profit by his misfortune. Personal Accident insurance, where a pre-agreed lump sum payment is made, is not a Contract of Indemnity.

Contractor’s All Risks

Sometimes called ’Contract Works Insurance’, this is an insurance policy which covers contract works, such as new buildings in the course of construction, and engineering projects, on an All Risks basis. This policy would usually include Public Liability cover as well. It is often arranged in the joint names of the principal and the contractors.

Contribution

Where someone is holding two or more insurance policies covering the same interest in the same property for the same peril, and if the policies are contracts of indemnity, then the law does not allow the insured to recover a loss under both policies and so make a profit out of the misfortune he has insured against. Instead, the insurers concerned share in the loss proportionately. This is known as contribution.

Contributory Negligence

A principal of law recognizing that injured persons may have contributed to their own injury. For example, by agreeing to be a passenger in a car being driven by someone that you know to be drunk. If you are subsequently injured you may be said to have been contributory negligent.

Coronary artery by-pass surgery

Refers to the actual undergoing of open-chest surgery to correct or treat Coronary Artery Disease (CAD) by way of Coronary Artery By-Pass Grafting. Angioplasty and all other intra-arterial, catheter based techniques, keyhole or laser procedures are excluded.

Cost Insurance and Freight

If you import or export your goods on a ’CIF’ basis, then insurance is included in the deal. ’C & F’ excludes insurance - in this case, the buyer has to make his own insurance arrangements.

Counter Guarantee

If an insurance company issues a Bond, then it will usually ask for either cash collateral or a counter guarantee from a surety or directors of the company to whom it issues the Bond. If payment is made by insurers, then redress will be sought against such sureties under a counter guarantee.

Co-payment

A provision in a medical and health policy which requires the policyholder to bear the difference in room charges as well as other eligible benefits (usually 10% - 20%) described in the policy contract if the rate charged by the hospital is higher than the policyholder’s eligibility.

Coronary Artery Disease

The narrowing of the lumen of at least three major coronary arteries (not inclusive of their branches) by a minimum of 60 percent or more as proven by coronary arteriography (non-invasive diagnostic procedures are excluded). Coronary Arteries herein refer to the Circumflex Artery, Right Coronary Artery (RCA), Left Anterior Descending Artery (LAD) and Left Main Stem ( a narrowing of 60% or more of the Left Main Stem will be considered as a narrowing of two major arteries). This benefit is payable regardless of whether or not any form of coronary artery surgery has been performed.

Coupon Insurance

On some large schemes, the individual insured may receive a certificate or coupon confirming cover. Full terms and conditions would be contained on the Master Policy. Coupon insurance also refers to insurance sold by completing forms in newspaper advertisements.

Crop Insurance

Covers various growing crops in the event of loss or damage caused by insured perils, notably fire, flood or hailstorm. In many countries this is available through government bodies.

D

Date of issue

Date when insurance company actually issues the policy document which may well be different from the commencement date of the insurance.

Deafness/ total loss of hearing

Total and irreversible loss of hearing in both ears as a result of illness or accident. Total means “the loss of at least 80 decibels in all frequencies of hearing”. Medical evidence in the form of an audiometry and sound-threshold tests must be provided and certified by an Ear, Nose, and Throat (ENT) specialist.

Debris Removal Clause

Policies covering buildings, machinery and stock do not always include the cost of removing debris and dismantling machinery. Yet these are usually necessary exercises after a loss of some kind.

Declaration

Information that the insured gives about the risk he wishes to insure, often, but not always, through the completion of a proposal form. For example, on motor insurance, the declaration would include make and model of car, name, address and occupation of proposer, and, as important, accident and offence history. On this information the insurance company decides the premium, and false declaration can lead to the policy being voidable.

Declaration Policies

These are adjustable policies offering you flexibility when it is difficult for you to predict accurately the value of your stocks over the next 12 months. At the start of the insurance period, you are asked to estimate the value at risk for the next year and to pay a deposit premium. You then declare the actual figure normally on a monthly basis and when your policy expires, the actual premium is calculated for final adjustment.

Deductible

Sometimes called an ’Excess’, it refers to the amount of your claim that you yourself must pay before your insurance cover will operate. Sometimes this deductible is imposed by insurers because of the nature of the risk and in other cases it is voluntary and a premium reduction can be allowed.

Defense Costs

Usually, policies that cover you against claims which may be made against you by third parties also include all litigation costs incurred by you while defending the action. This applies, for example, to public liability, third party motor and golfer’s liability policies.

Demurrage

In Marine Hull Insurance, this means any loss of hire period incurred by the ship owner due to his vessel being damaged through the fault of another party.

Denial of Access

It is possible that damage to a nearby building could prevent your company from trading. This clause in Business Interruption policies can cover you under such circumstances, even if your own premises are undamaged.

Defective Design

Although a Products Liability policy generally covers you against claims made by third parties when the product supplied by you has caused injury or damage, it does not do so if this has happened due to any defective design, faulty formula or wrong specification of your product.

Difference in Conditions Insurance

Often issued on a worldwide property cover which brings the more restrictive cover of policies issued in certain countries up to an agreed cover of a higher standard. For example, Fire and Perils upgraded by the Difference in Conditions Insurance to All Risks.

Directors and Officers

As a director or officer (that is, senior manager) of a company, you owe a duty of care to your company, and have, in certain circumstances, a personal responsibility to third parties. This type of policy is designed to protect senior company representatives against claims made against them for wrongful acts committed in their capacity as a director or officer of the company.

Disablement

If you are unable to work following an accident, a Personal Accident policy can offer compensation. A serious injury may mean you can never return to work. In such a case, a lump sum is paid. The compensation for a temporary absence from your job following an accident is a weekly payment
for as long as two years. Some companies also offer similar cover if you are merely ill.

Dividend

Money made available to policyholders based on an insurance company's earnings and monetary surplus.

Driving Other Cars

Most private motor policies also cover the policy holder when he is driving other motor vehicles, providing he has a license to drive them. However, cover does not include damage to the vehicle being driven under this extension, even if you have a fully comprehensive cover on your own car.

Drink/Drugs

If a motor vehicle is being driven by a person under the influence of alcohol or drugs, they will not be able to effect a claim for any accident or damage encountered at that time.

Dual Basis Wages

This refers to Business Interruption coverage for wages. When a business is seriously disrupted after an insured accident, this clause ensures that 100 % of the payroll for a few weeks after the accident will continue to be paid. If employees have no work, they may well be laid off and,
consequently, the percentage of wages payable can be reduced.

Duty of disclosure

E.g. ‘Full Disclosure of Material Fact’, refers to revealing all your relevant details in your insurance application to the insurance company. Failure to do so may render your policy invalid.

E

Earthquake

This is one of several Additional Perils that can be added to a Fire policy. In many cases a deductible will be imposed depending on the location of the risk.

Effective Date

The date from which the insurance is in force. Also known as commencement date.

Electrical and Mechanical Plant

This term refers to all types of motors, generators, engines, pumps and so on. To protect against trouble with key machinery, businesses can arrange a breakdown and all- risks cover under an Engineering policy (see below).

Electrical Machines and Installation

Under a Fire policy damage to these caused by overrunning, short circuiting and the like is excluded.

Employee’s Dishonesty

A Fidelity Guarantee policy protects the insured against money or property losses caused by the dishonesty of his own employees.

Employer’s Liability

Workman Compensation Acts or Employee’s Compensation Ordinances or whatever they are called in your country provide for the payment of compensation monies to employees who may be injured as a direct result of their job. However, employees have a common law right to sue their employer for negligence in some countries and so it is advisable for employers to extend any policy to include Employer’s Liability cover.

Encephalitis

Defined as severe inflammation of brain substance, resulting in permanent neurological deficit lasting for a minimum period of 30 days and certified by a neurologist. The permanent neurological deficit must result in an inability to perform at least three (3) of the Activities of Daily Living. Encephalitis in the presence of HIV infection is specifically excluded.

End stage kidney failure

End stage kidney failure presenting as chronic irreversible failure of both kidneys to function, as a result of which regular renal dialysis initiated or renal transplantation is carried out.

End stage liver failure

End stage liver failure as evidenced by all of the following:
• Permanent jaundice;
• Ascites; and br>
• Hepatic encephalopathy.
• Liver failure secondary to alcohol or drug abuse is excluded.

End stage lung disease

End stage lung disease causing chronic respiratory failure. All of the following criteria must be met:
a. Requiring permanent oxygen therapy as a result of a consistent FEV1 test value of less than one liter. (Forced Expiratory Volume during the first second of a forced exhalation)
b. Baseline Arterial Blood Gas analysis with partial oxygen pressures of 55mmHg or less
c. Dyspnea at rest

Endorsements

These are special or unusual provisions that have the effect of varying a standard policy wording, or they may be alterations made to the cover offered by the insured or insurer, after the policy has begun.

Endowment insurance

A combination of protection and savings whereby the money will be paid at the end of a specific period upon your demise or if you suffer total and permanent disability.

Engineering Insurance

This is a generic term given to a wide range of covers with respect to boilers, all forms of mechanical and electrical equipment and miscellaneous plant.

Equipment Floater

Cover for property that moves from location to location, for example, usually against Fire and Additional Perils, or All Risks.

Erection All Risks

Similar cover to Contractor’s All Risks insurance but whereas CAR refers mainly to buildings and civil engineering contracts, EAR is used for machinery and the like.

Errors and Omissions Insurance

Policies generally available to the various professions, for example, lawyers, insurance brokers, accountants, that require protection for negligent acts or failure to do something resulting in injury or damage to a client. For example, an insurance broker is constantly open to the claim that inadequate or improper covers were recommended, resulting in a client suffering a loss.

Exceptions

Sometimes known as Exclusions, these are designed to limit the insurer’s risk and can be found in the small print of policies. Notable examples would be the exclusion of war risks and nuclear damage, property covered by other insurances, etc.

Excess

The amount of your claim you have to pay before your insurance cover kicks in. See Deductible.

Excess of Loss

A form of reinsurance protection normally arranged between insurance companies. The cedant insurer decides the amount that it is prepared to bear on each and every loss, and arranges reinsurance with other companies to relieve it of any liability in excess of that amount.

Exclusions

See Exceptions.

Ex Gratia Payment

A payment made by the insurer to an insured out of grace or kindness.

Expediting Expenses

Payment by an insurer to speed up a return to business following a claim. For example, overtime may need to be worked following a Contractor’s All Risks claim on a building site to catch up on the contract. These are not always automatically covered and so should be specially provided for.

Experience Refund

Certain large policies, usually Employee’s Compensation insurances, provide for a refund of premium if losses sustained are less than anticipated when the insurance was taken out.

Explosion

Like earthquakes, explosions are considered an Additional Peril that can be insured. Although a fire policy insures a property against fire that results from explosions, the concussion damage that can result is not covered apart from the limited coverage extended to gas used for domestic purposes. This should be covered under an explosion.

Export Credit Insurance

Provides manufacturers and traders with credit cover that protects them against the risk of not being paid on a transaction - by a local or overseas buyer. Normally arranged by government companies.

Expropriation Insurance

This type of policy protects the holder against direct nationalization or public confiscation of an overseas facility. It also protects against an indirect form of expropriation that results when some governments intentionally discriminate against foreign-based enterprises.

Extortion Insurance

Specialized cover in the event of threats to injure an insured in some way. Nowadays seen all too frequently regarding tampering with goods on supermarket shelves in order to extort money.

Expiry

The termination of a term life Insurance policy at the end of its period of coverage.

F

Facultative Reinsurance

This means that each risk is reinsured separately. Under this system, the reinsurer decides how much of the risk he wishes to insure, according to the merits of each individual case.

Fees, Professional

Under a policy covering buildings and/or machinery against damage, it is possible to insure fees incurred for rebuilding or repair work resulting from damage, in a couple of ways.
These are normally calculated as a percentage of the value of the building, or machinery, and are limited according to the scales set out by professional bodies. If insured separately under a policy covering commercial property, such fees are not subject to Average.

Fidelity Guarantee

This type of insurance protects employers against the ’direct pecuniary loss’ which they could suffer if any of their employees committed a fraud or any other act of dishonesty against them. ’Direct pecuniary loss’ refers to the loss of monies, stock or other items of value, the loss of which can be proven and for which the employees responsible can be identified. Unaccountable deficiencies or losses are not covered.

Fire and Theft

When full Comprehensive Motor insurance is not required (e.g. for older cars), a Third-Party policy can be extended for an additional premium to cover loss or damage caused by fire or theft, including attempted theft. Vehicles laid up, that is, not used on a road, can be covered for fire and theft only.

Fire Policy

The standard Fire policy covers fire, lightning and explosion of gas used for domestic purposes only. Always make sure you also include full Additional Perils cover, which includes full explosion, damage by aircraft, storm, flood, earthquake and others.

Fire Waste

This is the absolute economic loss of wealth to the community caused by fire. Insurance can pay for the individual’s insured losses resulting from a fire, but there is still an irreplaceable economic loss in the wastage of material and manufacturing cost.

First Loss Policies

Often used in Theft insurance. Rather than the usual full- value policy (insuring the total value at risk) the insured decides on a first-loss sum insured which should equal the maximum amount that could possibly be stolen at one time. Such a policy can be particularly useful for high-value machinery and plant which would be physically impossible to steal all in one go.

Fleet Policy

If a company owns several vehicles, they can all be insured under the one policy and usually enjoy a discount.

Floating Policy (Fire)

This covers contents or stock spread over more than one set of premises, or over more than one building. This is also available for contractors who want to cover all similar contracts undertaken in a year, with the premium adjustable at year-end on declaration of the actual contract values.

Floating Policy (Marine)

The insurance company first grants the insured a large initial sum-insured. Then each time the shipment is sent, the insured declares them to the insurer. The value of the shipment is then deducted from the outstanding sum insured. But it is more common nowadays to use an ’open’ policy.

Flood

An Additional Peril in a Fire policy, normally granted together with ’storm’ cover. It is subject to a small excess, that is, the insured pays the first agreed amount of loss, unless your premises have been particularly exposed, in which case it might be more.

FOB Contract

’Free On Board’ means that the seller’s interest in the goods will cease once they are loaded onboard the carrying vessel. Thereafter, the buyer takes over responsibility for them, including any insurance he considers necessary.

Foreign Use (Cars)

Motor policies in some countries are automatically extended to cover use in neighbouring countries, for example, Singapore policies cover use in Malaysia and Southern Thailand. In other countries, for example, Hong Kong, a special extension is required to cover use in China.

Foundations Clause

It is sometimes considered that the foundations of a building will not be affected, however serious the overall damage. The foundations are then excluded from the insurance by this clause, thus reducing the sum insured, and the premium. But beware earthquakes!.

Franchise

If a policy features a franchise expressed in money terms, there is no payment by the insurer if the total claim is below the franchise figure. If it is above the franchise figure, the agreed claim is then paid in full. Time franchises may also be used particularly for machinery breakdown covers.

Free look

A period of time (usually 15 days) during which a policyholder may examine a newly issued individual life or health insurance, and surrender it in exchange for a full refund of premium less expenses incurred for the medical examination of the life policyholder, if not satisfied for any reason.

Free of Particular Average (FPA)

Is the narrowest form of Marine Cargo insurance in common use. Nowadays referred to as Institute Cargo Clauses C cover, it provides that as well as total losses; partial losses resulting from perils of the sea are recoverable, but only in the event that the carrying vessel has stranded, sunk, burnt, been on fire or been in collision.

Free of Capture and Seizure Clause

Exclusion of cover in Marine insurance if damage results from war, capture or seizure. Covers can usually be suitably extended.

Full Theft Cover

If you import or export your goods on a ’CIF’ basis, then insurance is included in the deal. ’C & F’ excludes insurance - in this case, the buyer has to make his own insurance arrangements.

Fulminant viral hepatitis

This is defined as a sub massive to massive necrosis of the liver caused by any virus leading precipitously to liver failure. The diagnostic criteria to be met are:
a. A rapidly decreasing liver size as confirmed by abdominal ultrasound;
b. Necrosis involving entire lobes, leaving only a collapsed reticular
framework;
c. Rapidly deteriorating liver functions tests; and
d. Deepening jaundice.
Hepatitis B infection or carrier status alone does not meet the diagnostic criteria

G

General Agent

In some parts of the world this term merely means an insurance agency involved in all types of insurance. In the Far East it is more likely to mean an insurance agency acting in loco parentis under a power of attorney from an overseas based insurer and empowered to underwrite risks and settle claims on behalf of that insurer.

General Average

If all parties involved benefit from a sea voyage that is saved from disaster although at the expense of sacrificing property or incurring extra costs, it seems only fair that parties should then each bear part of the expense. An example is when a cargo has to be jettisoned in order to save a vessel in danger of sinking during a storm. The cargo interests who lose out get some of their money back by calling for ’General Average’ contributions from all the parties, both hull and cargo, that benefited from this action.

General Exceptions

These apply to the whole policy rather than just a part of it. They usually relate to major catastrophes such as war, radioactive contamination and nuclear explosions. Coverage against such extraordinary events is not standard.

General Principles

Insurance practices have developed over several hundred years. Certain principles have been established and upheld by the courts or codified by acts of Parliament. These principles, including the concept of Contribution, Indemnity, Proximate Cause, and Utmost Good Faith, are now the foundation stones of today’s insurance practices.

Geographical Limits

These restrict the coverage of a policy to accidents or losses that occur within a specified boundary that may or may not correspond to a national border. Geographical limits are sometimes applied to so-called All Risks policies on jewellery or other items. Check your policy if you travel abroad to make sure you have the coverage you need.

Glass

This is a class of insurance normally provided as part of a package for offices, shops, and hotels although separate insurance can be arranged when required. The basic cover is for breakage of fixed glass from any cause (although there are usually some exceptions, such as damage to frames or framework). Cover can also be obtained for showcases, neon signs, ornamental and lettered glass.

Golfer's Insurance

This is a readily available package policy covering loss of or damage to golfing equipment, liability to third parties, personal accident and ’hole-in-one’ entertainment expenses.

Goods in Transit

Hauliers or owners who carry goods in their own vehicles can get All Risks insurance cover for the goods carried. Cover for hauliers may be restricted to their liability under contract conditions, or it may be allowed up to full value.
Under this heading, cover is also available in respect of postal shipments and household removals. Transit by sea or air is insured under a Marine policy.

Grace period

A prescribed period, usually 30 days from the premium due date, during which an insurance contract is kept in force despite non-payment of premium. If premium is not paid within the grace period, the policy may lapse or be subject to reduced paid-up or automatic premium loan.

Gross Premium

Normally refers to that premium payable by the Insured, that is, without deduction of intermediaries’ commission.

Gross Profit

This is insured under a Consequential Loss Policy, also known as Business Interruption or Loss of Profits insurance.Gross profit in insurance terms may not match your accountant’s definition, so check that you have given your insurer the figures he wants. Gross profit is normally defined by insurers as the amount by which the sum of the turnover and the closing stock shall exceed the sum of the opening stock and the uninsured working expenses (which are the variable or standing charges specified in the policy).

Group life insurance

Life insurance covering a group of people under a master policy. The policy is issued usually without the requirements of medical examination on the lives assured. It is typically issued to an employer for the benefit of employees, or to members of an association.

These set out the conditions upon which goods are carried by sea - in other words, the obligations and responsibilities of the carrier and shipper.

Hail Insurance

Hail is the perennial worry of crop farmers. This can be included under a Crop Insurance policy.

Hazard

Underwriters look at two aspects of hazard, the physical and the moral. Physical hazard refers to the tangible aspects of the risk that could make a loss more or less likely, or increase or decrease the severity of that loss. A moral hazard, as the terms itself suggests, is concerned with the attitude and conduct of the insured himself, as well as that of his employees.

Hazardous Pursuits

Personal Accident policy exclusions vary on the subject of hazardous pursuits and pastimes, so check your fine print thoroughly. Parachuting, hang-gliding, mountaineering and racing (other than on foot) are normally excluded. The proposal form asks you whether you engage in any hazardous pursuits or pastimes normally regarded as dangerous. If in doubt, list them all.

Heart attack

The death of a portion of the heart muscle (myocardium) as a result of inadequate blood supply and being evidenced by all of the following criteria:
a. A history of typical prolonged chest pain,
b. New electrocardiographic changes resulting from this occurrence,
c. Elevation of the cardiac enzyme, CPK-MB above the generally accepted laboratory levels of normal or troponins recorded at the following levels or higher: -Troponin T > 1.0 ng/ml or equivalent threshold with other Troponin I methods Angina is specifically excluded.

Heart valve surgery

The actual undergoing of open-heart surgery to replace or repair cardiac valves as a consequence of heart valve defects or abnormalities. Repair via intra-arterial procedure, key-hole surgery or similar techniques are specifically excluded.

Highly Protected Risk (HPR)

This is an American term to denote a risk where firm action has been taken to reduce the frequency and severity of a loss, such as sprinkler system and fire and smoke alarms. The term is reserved for the best quality risks which consequently enjoy a lower premium rating.

Hijacking

Standard Aviation Hull Insurance usually excludes this form of cover, which can be purchased for an additional premium. As far as Personal Accident Insurance is concerned, unless the policy says otherwise, accidental bodily injury sustained as a result of hijacking will be covered.

Hired-in Plant

Your Machinery policy may have to be specifically endorsed to cover the sums that you may become legally liable to pay under the terms of your hiring agreement should you lose or damage the plant you have hired.

Hired Premises

If you hire premises for meetings, social gatherings and the like, you may have a responsibility to both the owners and the users. Your responsibility to the owners may arise out of your contract with them, so check the wording carefully and make sure that your Public Liability policy is extended
to include the risk of damage to property that may be under your custody or control. If you also accept responsibility for the safety of the premises hired, then this may well involve substantial liability to people using the premises - take care!.

HIV due to blood transfusion

Infection with the Human Immunodeficiency Virus (HIV) through a blood transfusion, provided that all of the following conditions are met :-
a. The blood transfusion was medically necessary or given as part of a medical treatment;
b. The blood transfusion was received in Malaysia or Singapore after the commencement of the policy;
c. The source of the infection is established to be from the Institution that provided the blood transfusion and the Institution is able to trace the origin of the HIV tainted blood;
d. The insured does not suffer from Hemophilia; and
e. The insured is not a member of any high risk groups such as but not limited to intravenous drug users

Hoists and Lifts

You need a license to operate this kind of equipment, and the factory inspectorate will have to make regular inspections of it. Machinery Breakdown and Liability insurance is available from your insurer.

Hole-in-One

A golfer by tradition has to buy drinks for everyone in sight at the 19th hole (the bar) if he scores a coveted hole-in-one.
A golfer’s policy normally includes cover for these entertainment expenses up to a certain limit. Organizers of a tournament, or sponsors of a major prize for a hole-in- one, can also arrange a policy that will cover the cost of the prize if won.

Household Insurance

There is a trend nowadays towards combined policies covering buildings and contents for fire, theft, liabilities and a host of other add-ons, everything from pleasure craft to pedigree pets.

Hull Insurance

Vessels are normally insured under the Institute Time Clause Hulls which set out terms of cover. This insurance is in respect of the ships themselves as opposed to Cargo Insurance which covers their contents.

Human Immunodeficiency Virus (HIV) infection

Infection with the Human Immunodeficiency Virus (only if the life assured is a Medical Staff as defined below), where it was acquired as a result of an accident occurring during the course of carrying out normal occupational duties with sero-conversion to HIV infection occurring within six (6) months of the accident. Any accident giving rise to a potential claim must be reported to the Company within thirty (30) days of the accident taking place supported by a negative HIV test taken within seven (7) days of the accident. “Medical Staff” is defined as Doctors (General Physicians and Specialists), nurses, laboratory technicians, dentists (surgeons and nurses), ambulance workers who are working in the medical centre or hospital or dental clinics/polyclinics in Malaysia. Infection in any other manner including as a result of sexual activity, blood transfusions or recreational intravenous drug use is specifically excluded.

I

Impact

An Additional Peril that can be added to a Fire policy. It covers damage to your property, notably buildings, by any road vehicle. Old wordings used to exclude the insured’s own vehicles, so it is worth checking if you have a risk with own vehicles at your premises. Even older wordings included damage by horses and cattle! A small excess is normally imposed - in other words you have to carry a proportion of the loss yourself.

Implied Conditions

Conditions not actually written down in the policy but that have evolved through practice or legislation over the past few hundred years to form the basic principles. For instance, the property insured must actually exist, and the insured must have an insurable interest in it.

Increased Cost of Working

This cost can be insured under a Consequential Loss Policy.
Normally suitable for office risks where profit would not be affected by, for example, a fire, but there would be increased costs, such as the rental of alternative premises or the reconstruction of records.

Incurred Losses

Losses which have occurred within a specified time frame whether paid or still outstanding.

Incontestable Clause

A clause in a life insurance policy providing that after a policy has been in effect for a given length of time (one or two years), the life insurance company shall not be able to contest the statements contained in the application unless fraud can be proven.

Indemnity

One of the five general principles. An insured should not profit by a claim, but should be put in the same financial position as he was immediately before it happened. Personal Accident policies can be an exception to the rule, as they have fixed sums insured, as can policies that give ’New for Old’ replacement covers, which could put the insured in a better position.

Index Linked Policies

These can increase sums insured automatically at each renewal. Usually buildings would be increased by the rebuilding cost index, and contents by the retail price index.

Industrial All Risks

Also known as Industrial Special Risks or Commercial All Risks. Most business property covers are written on a Named Peril basis, that is fire, explosion, flood etc. The modern trend, especially with large accounts, is to issue them on an All Risks basis which would extend cover to all accidental damage - but be sure to read the exceptions.

Inherent Vice Exclusion

Found in Marine Cargo policies. It is unreasonable to expect indemnity for damage which you can see is bound to occur during any normal transit, and which arises solely because of the nature or condition of the goods shipped. An example of damage from inherent vice would be deterioration of imperfectly cured skins.

In-Patient Cover

Medical Expenses restricted to hospitalization, as opposed to out-patient cover which would cater for visits to doctors and the like.

Inspection

Lifting equipment, cranes, boilers and air compressors need to be inspected annually by a professional engineer approved by the factory inspectorate in most countries, and an inspection certificate must be obtained.

Institute Cargo Clauses

These define the extent of cover available under a Marine Cargo policy. Clauses A, B and C equate to All Risks, With Average (WA) and Free of Particular Average (FPA).

Insurable Interest

This is one of the basic principles of insurance and the main difference between insurance and gambling. The insured must stand to lose financially by an event against which he wishes to insure himself.

Intermediaries

The ’middlemen’ of insurance who arrange a contract between the insured and insurance company. The main types are Brokers and Agents, who are paid a commission by the insurer.

Insurance company

A company licensed under the Insurance Act 1996 to carry on life or general insurance business or both life and general insurance business.

Insured

The person whose life or health is covered by a specific policy.

Investment-linked insurance

A life insurance policy where the policy value at any time varies according to the value of the underlying assets at the time.

Issue date

Also known as “Effective Date”. The date that an insurance policy is approved.

J

Jettison

A Marine Insurance term referring to the ditching of cargo to lighten the ship in order to save it from sinking. Covered under Institute Cargo Clauses A, B and C.

Jewellers Block

A specialist policy for jewellers and goldsmiths. There is a limited market available for this and it is a policy normally subject to fairly stringent security measures in view of the type of goods.

Jewellery

Personal jewellery is insured under an All Risks policy or section of a combined Personal Lines insurance. Cover is normally available for specified items, or unspecified up to a certain limit per item.

Judicial Bond

A type of Surety Bond that is either a fiduciary or court bond, that is, a contract by which one party agrees to make good the default or debt of another. A fiduciary bond guarantees that an individual, for example, a guardian, will safeguard assets belonging to others placed under the guardian’s control, in this example, minors or deceased person’s estates. Court bonds come in many ways but would include the .guaranteeing that a judgment will be paid if an appeal is lost in a higher court.

Jurisdiction Clause

Often endorsed on Liability policies to make sure any action is brought under a particular jurisdiction. Designed to stop plaintiffs ’forum shopping’ that is shopping around the courts of the world in order to establish which would be the most favourable one for their claim.

K

Kidnap and Ransom

It is possible to obtain insurance from specialist markets to cover ransom demanded by kidnappers whether they be politically or just criminally motivated. Insurance can be purchased by individuals or companies worried about their key executives. This is a highly sensitive issue, with some governments declaring insurance to be contrary to public interest in that it may encourage criminals and terrorists to commit such crimes if they know there is insurance to pay for the losses.

Knock for Knock Agreement

In Motor Insurance, it frequently happens that an insured can make a claim under his policy or recover from a negligent third party. The usual procedure is for a claim to be made against his insurance company which will then pursue recovery under subrogation rights. To simplify recovery claims among insurers, there is sometimes an inter-company agreement whereby each insurer pays the vehicle’s repair costs of its own policy-holder.

L

Laid-Up Returns

Marine Hull Insurance is either arranged on a Cancelling Returns Only (CRO) basis or on the basis of a pre-arranged refund should the vessel in question be laid up. CRO means that you can only get your premium returned if you cancel the policy. With a pre-arranged refund, usually, the definition of ’laid-up’ means the ship must be out of action for at least 30 consecutive days.

Landslip

You can insure against this, usually together with cover for subsidence. It is possible to take out a restricted cover for subsidence and landslip caused by flood. Full cover is normally available only after a survey of the premises or area, and also subject to a large deductible. Even then, erosion, heave and settlement/cracking in structures which have been caused by normal earth movements are excluded from such policies.

Lapse

Expiring of policy due to failure to pay the renewal premium.

Legal Costs

Public Liability insurance includes cover for the costs and expenses of litigation recovered by any claimant against the insured, or incurred by the insured with his insurer’s consent.
Normally, these costs are covered over and above the limit of indemnity stated on the policy. However, the modern trend, especially for Products Liability, and particularly if there is any exposure in North America, is for the policy to be issued on a ’costs inclusive’ basis.
Third Party sections of Motor policies also include costs and expenses incurred with the insurer’s consent, but that does not mean that the insurers will pay to defend you against a criminal charge arising out of an accident. When liability is in doubt, of course, they will normally do so, but with charges like drunken driving, failure to render assistance after an accident and the like, you will most likely find yourself on your own.

Legal Expenses Insurance

Becoming more prevalent in the western world, this would pay for a number of agreed legal services. For example, if a tenant in your house refused to move out at the expiry of the lease, this type of policy would meet the necessary legal costs.

Legal Liability

Obligations and responsibilities subject to evaluation and enforcement in a court of law. Public, Products and other Third Party Liability insurance would normally only cover your Legal liability for civil actions plus costs incurred.

Liability Insurance

Covers Legal Liability to third parties, including legal costs.
Public and Products Liability are the most common forms.

Libel and Slander

You can rarely get this kind of cover as a separate policy, but you can add it to a Professional Indemnity cover.
Professional indemnity can also cover claims made against you for things like infringement of trademark, copyright or patent rights, as well as libel and slander. But professional indemnity will not cover criminal libel or actions arising out of your own personal spite towards a claimant.

Life insurance

An agreement that guarantees the payment of a stated amount of monetary benefits upon the death of the insured, or under other circumstances specified in the contract, such as total disability.

Lightning

A standard Fire policy will automatically cover damage to property caused by lightning.

Limits of Liability

Except for Motor Third Party Injury, which is an unlimited policy, liability policies normally contain a Limit of Liability stating the maximum amount insurers will pay for a particular event. This limit usually applies to the total of all claims arising out of a single event. Some policies will also have a limit set for each policy period.

Liquidation

Receivers and the managers of companies in liquidation can get insurance packages to aid them in their hour of need. Such insurance usually provides automatic facilities to ease the manager’s administration burden during the busy first few days.

Livestock

The cover-encompasses sickness or disease in animals as well as death from accidents, including fire and lightning. Bloodstock insurance covers the thoroughbred racers.
Livestock insurance includes the other farm type animals.

Lloyd’s

This is probably the world’s most famous insurance market, and certainly the top Marine insurance and shipping intelligence centre. It all started in a London coffee-house in the seventeenth century.

Long Term Agreement

These are no longer so commonly available, mainly because insurance rates have hit rock bottom and they were rarely enforced anyway. But they offer a discount if you agree to renew for a minimum period of three years.

Loss Adjusters

Adjusters are independent firms which deal with the investigation of insurance claims, their causes and the values involved. Although their fees are paid by insurers - who would have to maintain more technical claims staff if adjusters did not exist - loss adjusters are impartial.

Loss of independent existence

Confirmation by an appropriate specialist of the loss of independent existence lasting for a minimum consecutive period of 6 months and resulting in a permanent inability to perform at least three (3) of the Activities of Daily Living.

Loss of Profits

Also known as Business Interruption or Consequential Loss insurance.

Loss of speech

Total and irrecoverable loss of the ability to speak for a continuous period of 12 months. Medical evidence to confirm injury or illness to the vocal cords to support this disability must be supplied by an Ear, Nose, and Throat specialist. All psychiatric related causes are excluded.

Loss of Use of Vehicle

Standard Motor policies do not include this cover but if you are involved in an accident caused by someone else, you can claim loss of use, and the cost of hiring a replacement vehicle against the other party’s insurers.

Loss Ratio

The ratio of losses paid and outstanding to earned premiums.
If an insured suffers a number of expensive claims relative to the premium paid, they are described as having a poor loss ratio.

M

Machinery

You may not have made yourself quite safe enough by insuring your machinery only against fire and the usual perils. Both Machinery Breakdown and Breakdown Consequential Loss cover should be considered too.

Under many building and civil engineering contracts, and therefore insurances, contractors must carry out maintenance during a prescribed period after the completion of the contract.

Major burns

Third degree (i.e. full thickness) skin burns covering at least twenty percent (20%) of the total body surface area.

Major head trauma

Physical head injury causing permanent functional impairment lasting for a minimum period of three (3) months from the date of the trauma or injury. The resultant permanent functional impairment is to be verified by a neurologist and must result in an inability to perform at least three (3) of the Activities of Daily Living.

Major organ / bone marrow transplant

The receipt of a transplant of:
• Human bone marrow using hematopoietic stem cells preceded by total bone marrow ablation; or
• One of the following human organs: heart, lung, liver, kidney, pancreas that resulted from irreversible end stage failure of the relevant organ.
Other stem cell transplants are excluded.

Malicious Damage

This is an optional Additional Peril you can insure against under a Fire policy and it is taken together with cover against damage caused by riot and strike.
Cover against malicious damage insures you against damage caused by ’malicious persons’. However, such damage excludes malicious break-ins, which are covered under a Burglary/Theft policy. An arson fire would be covered under the standard Fire policy unless it was started by the insured, of course.

Malpractice Insurance

Professional indemnity cover referring to doctors, hospitals and the like.

Marine Insurance

Generic term for covers in respect of both Hull and Cargo.

Material Damage Proviso

It is a condition of a Business Interruption policy that you are required also to have a Material Damage policy (usually a Commercial Fire policy).
This policy should cover the same property or premises covered under the Business Interruption policy against the same peril that caused the damage, and the material damage insurers must also have accepted liability for that damage.

Maturity Date

The date at which a life insurance policy has completed its full term and the face amount becomes payable usually with the condition that the life insured survives to that date.

Maturity value

The amount payable to a living insured at the end of an endowment period or to the owner of a whole life policy if he lives past a certain age.

Material Fact

Anyone seeking insurance must disclose all the material facts about the risk involved that he or she knows, or that they ought to know. In other words, the insured should not hide anything.
The trouble is, certain facts which the underwriter may deem ’material’ may not always be known to the insured person. The best principle to follow is: If in doubt, mention it anyway.’ If you are not sure whether some other piece of information may or may not be relevant, tell your insurers anyway

Maximum Indemnity Period

Estimating the length of time during which you may still be paying for losses resulting from some interruption of business is a tricky business. But you have to make such an estimate when you take out Consequential Loss (Loss of Profits) cover against business interruption losses. You should play safe and pick the longest possible time you think may be necessary to rehabilitate your business following damage caused by some catastrophe you have insured against. This period of time is called the maximum indemnity period.

Maximum Probable Loss

This is the largest loss thought probable under any given insurance policy. It is a concept normally applied to material damage risks, where the total sum insured will not be destroyed by one event, such as fire or earthquake.

Medical Insurance

Insurance which provides specified benefits to cover medical expenses incurred against risks of persons becoming totally or partially incapacitated or hospitalised as a result of sickness or infirmity.

Money Insurance

’Money’ is usually defined for insurance purposes as cash, bank and currency notes, cheques, money orders, postal orders and current postage stamps. You can cover against their loss while they are on your premises and while they are in transit to and from the bank.

Moral Hazard

The insurance underwriter needs to assess not only the physical hazard involved in any risk, such as the construction of a building and what it is to be used for, but also the ’moral hazard’. Moral hazard refers to the character and circumstances of the would-be insured person, or of his employees. It covers such" elements as honesty and carelessness, as well as any previous difficulties with this client over claims settlements.

Mortgagee Clause

Protects the interest of the mortgagee under property insurance by paying to him up to the value of his interest in the event of a major claim.

Motor Insurers Bureau

Many countries have these systems where all motor insurers get together to make compassionate payments to injured people, or to the dependents of those killed, in motor accidents where the guilty driver cannot be traced, or is found to be uninsured. Sometimes the fund is paid totally by insurers, and in other countries it is funded by a policy holder’s levy.

Multiple Insurance

Coverage from two or more policies which duplicate coverage of certain risks.

Multiple Sclerosis

Unequivocal diagnosis by a consulting neurologist confirming the following combination, which has persisted for at least a continuous period of six (6) months:
a. Symptoms referable to tracts (white matter) involving the optic nerves, brain stem and spinal cord, producing well-defined neurological deficits;
b. A multiplicity of discrete lesions; and
c. A well-documented history of exacerbation and remissions of said symptoms/neurological deficits

Muscular Dystrophy

The diagnosis of muscular dystrophy shall require a confirmation by a neurologist of the combination of 3 out of 4 of the following conditions:
a. Family history of other affected individuals
b. Clinical presentation including absence of sensory disturbance, normal cerebro-spinal fluid and mild tendon reflex reduction
c. Characteristic electromyogram
d. Clinical suspicion confirmed by muscle biopsy
No benefit will be payable under this Covered Event before the Life Assured has reached the age of 12 years next birthday.

Mysterious Disappearance Exclusion

Some policies exclude cover if the cause of the loss cannot be identified. Nowadays, most Personal All Risks policies would cover losses of property even if the owner did not know how it had happened.

Medullary cystic disease

A progressive hereditary disease of the kidneys characterized by the presence of cysts in the medulla, tubular atrophy and interstitial fibrosis with the clinical manifestations of anemia, polyuria and renal loss of sodium, progressing to chronic renal failure. Diagnosis should be supported by a renal biopsy.

Motor neuron disease

Refers to a progressive degeneration of the corticospinal tracts and anterior horn cells or bulbar efferent neurons. These include spinal muscular atrophy, progressive bulbar palsy, amyotrophic lateral sclerosis and primary lateral sclerosis. The diagnosis must be confirmed by a neurologist as progressive and resulting in permanent neurological deficit.

N

Named Drivers

Either as an underwriting restriction, or a method of premium reduction, driving can be restricted under a Motor insurance to named drivers only. If you have this restriction - be careful about the vehicle being driven by garage mechanics or jockey parkers.

Named Peril Policy

Such a policy specifies what perils are covered, whereas an All Risks policy would automatically cover anything not specifically excluded.

Negligence

This is the most common form of breach of duty towards third parties under Common Law (also known as Tort). It is the failure to do something which a reasonable person would have done under the same circumstances, or alternatively an action which a ’reasonable’ person would not have done.

Neon Signs

If you have a Named-Peril Fire policy, the chances are that you do not have accidental damage cover for signs. You may need to arrange this separately. Also check that your Liability policy extends to cover problems that will arise if your signs fall on people.

’New for Old’

This is also called Reinstatement cover, which is found in different forms on different policies. Basically, it means the insurer agrees to settle the claim on the new replacement value of the item, that is with no deduction for wear and tear, regardless of what the item was bought for, or what its current market value is.

No Claim Discount

This is exactly what it says ’it is. If a policy holder completes a year of insurance without making a claim, he will get a discount off his premium when he renews his policy. Claims cost money - note that this is not a ’no blame discount’, in other words, whether you are the one at fault is not the only criterion.

Nomination

The act of naming someone as the nominee of a life or personal accident policy.

Nominee

A person or persons named in a life or personal accident policy to receive the benefits under the policy.

Non-admitted Insurer

An insurer not licensed to do business in the particular country in question.

Non-contribution Clause

The principle of Contribution is sometimes removed by a clause saying the policy will not apply where the insured is entitled to claim under another policy. If both policies contain the non-contribution clause, then court precedents exist for both insurers to contribute proportionately.

Non-disclosure

See Material Fact. Non-disclosure of a material fact gives an insurer grounds to avoid honouring the insurance contract.

Non-participating policy

A type of life insurance policy or annuity for which the policyholder does not receive dividends or bonus

Notice of Cancellation

Under the terms of most policies either the insured or the insurer may cancel the policy before expiry dare by giving the requisite notice, according to the policy, to the other party and refunding a pro rata premium.

Notice of Claims

Under a Marine Hull policy, Clause 10 requires the insured to give notice of any accident to the underwriters.

Notification

All policies have conditions on notification of claims to insurers. Some say notice should be given ’soon as possible’ or ’forthwith’ while others specify a period within which the incident must be reported. There is obviously no point in delaying. Even if you do not have full particulars of the claim, report the matter and ask advice from your insurer’s claims department as to the next step to take.

Nuclear Exclusion

All damage and liability policies exclude nuclear risks.

Nuisance

Like Negligence, this is an area where an insured person may incur liability. ’Nuisance’ refers to the wrong done to a person by unlawfully disturbing him in the enjoyment of his property, or sometimes in his exercise of a common right. There are two kinds: private and public. A private nuisance affects the rights of an individual - damage caused by tree roots encroaching on a neighbour’s property, for example. A public nuisance, on the other hand, affects the rights of the public generally - such a nuisance is a crime.

O

Observance of Conditions

This is a standard condition in all policies. It stresses that the insured person must comply with the terms of the policy before he can expect his insurers to pay the claim, which seems simple enough. This condition also links up with the declaration on the proposal form that answers given must be truthful. Simple, but all too often, conveniently forgotten!

Occupation

Your occupation is considered an important potential risk feature in a Personal Accident insurance policy. The difference in risk to the insurer between a clerk and a deep- sea diver should be obvious. So if you change occupation from bank teller to tiger-tamer, please notify your insurers at once, as this is a material fact.

Occurrence

In insurance lingo, this is the happening of an event that has given rise to a claim during the period of insurance. In Liability insurance, this is particularly important, as policies may sometimes be issued on a ’claims made’ basis during the period of insurance, irrespective of when the injury was caused or when the negligent act in question took place.

Offer and Acceptance

A contract of insurance is made when one party makes an offer and the other party accepts it, both parties being in agreement as to the terms of the contract. Usually, the offer comes from the Proposer, the would-be insured person. But in Coupon insurance, it is the insurer who makes the offer and the person returning the coupon who accepts.

Ombudsman

This bemusing Scandinavian word simply means ’Arbiter of Disputes’. Insurance Ombudsman Bureaux are set up in various countries to give independent assistance to Personal Lines policy holders who are in dispute with their insurers. Also known as Claims Complaints Bureaux they make decisions binding on insurers but not affecting the legal rights of claimants. Check if your insurer is a member.

Onus of Proof

’Onus’ is simply the Latin word for ’burden’. It is a concept relevant to Liability Insurance, where the onus, or burden, of proving negligence usually rests with the plaintiff. There are certain circumstances, however, in which a prima facie (a Latin term which means ’at first sight’ or ’on first
impression’) liability rests on one of the parties. Once it has been proven that an accident has occurred, for example, the onus is transferred to the defendant, to disprove his or her own negligence. See ’Res Ipsa Loquitor’.

Open Policy

This is a term commonly found in Marine Cargo insurance.
Instead of the annual premium being paid at the inception of the policy, individual shipment certificates are issued and charged for, or handled on a monthly basis.

Operative Clause

This clause in an insurance policy details the type of event insured against. Naturally, it varies greatly, depending on the type of policy involved.

Other Contents Clause

Under a Fire policy, for administrative convenience, the basic specification categorizes the subject matter of the insurance as buildings, stock, machinery, plant and all other contents. These ’other contents’ are also defined and some items are given monetary limits. Hence, it is best to check the adequacy of these limits when you take out a fire policy.

Overinsurance

The basic principle of indemnity means that no one should profit from a fortuitous loss. There is therefore no point in overinsurance - it is just a waste of premium. However, non-indemnity insurances such as Personal Accident benefits have to be watched closely by insurers to prevent fraudulent claims.

Own Damage

Under a Comprehensive Motor policy, this phrase refers to the accidental loss or damage cover on your own vehicle (not damage you yourself may have inflicted on your own car, for some demented reason).
Insurers have the choice of compensating the insured person by paying for repairs, by replacing the car, or by making a cash payment. Policies extend to include all accidental damages, but wear and tear, breakdown and the like are excluded.

P

Package Policy

As the name suggests, you get a package deal under one policy. For example, with the package Personal Lines policy, you can be covered for a multiplicity of things pertaining to yourself and your personal belongings, such as home buildings and contents, jewellery, liability, personal accident, motor car and others, making it easier for you to insure all in one go.

Paid-up policy

A policy which does not require any future premium payments but which is not yet terminated by either death or maturity.

Pair or Set Clause

This clause limits the insurer’s liability in the event of loss of or damage to any article which is part of a pair or set. The clause requires the insurer to pay only the value of that particular part lost, not any special value it might have because of being part of a pair or set.

Parkinson's Disease

Unequivocal diagnosis of Parkinson`s Disease by a neurologist where the condition:
a. Cannot be controlled with medication
b. Shows signs of progressive impairment
Activities of daily living assessment confirm the inability of the life insured to perform without assistance three (3) or more of the Activities of Daily Living.
Only idiopathic Parkinson's Disease is covered. Drug-induced or toxic causes of Parkinsonism are excluded.

Participating policy

A policy which shares in the distributable surplus of a life insurance company by acquiring bonuses or dividends.

Particular Average

This is the loss to a ship, freight or cargo interest which is not shared by contribution from all the interests involved - as in general average - but is borne only by the owner whose interest has been lost or damaged.

Payer benefit

A rider or provision often found in juvenile policies under which premiums are waived if the person paying the premium, usually one of the parents, becomes disabled or dies while the child is still a minor.

Performance Bond

A bond that pays to the principal under a contract if the contractor does not complete as per the specifications of the bid. Normally comes into play if the contractor goes into liquidation before completion, but can be called to pay if there is undue delay.

Perils

Under a Fire or Consequential Loss policy, the inclusion of Additional Perils cover protects the insured person against damage caused by, among other things, explosions, riots
and strikes, malicious damage, aircraft, impact by road vehicles, burst pipes or ’acts of nature’ such as storms, floods and earthquakes.

Personal Accident

With this type of policy, the insured person or his/her beneficiaries is protected against the consequences of any accident, whether the result be death, loss of an eye or limb, or any other permanent disability. The policy provides capital, lump sums, plus weekly payments. Personal Accident policies are not contracts of indemnity and it is therefore important that the insurer checks that the sums insured are commensurate with the insured’s lifestyle.

Personal Liability

Hopefully, this will not happen to many of us, but in the course of our lives, there are many things we may be liable for, although quite unintended on our part. For instance, we may, by some silly accident, poke someone’s eye out with an umbrella. Such an incident must, of course, result in some tangle with the law. Personal Liability coverage helps us pay for the compensation due after such accidents. Most good quality Personal Lines package policies would cover this sort of event.

Personal Lines

A generic term referring to insurances written for the individual, such as Householders, Jewellery All Risks, etc.

Pet Insurance

Not very common in this part of the world, but there are schemes elsewhere that would cover veterinary charges and even small amounts of compensation if your favourite pedigree is accidentally killed.

Physical Hazard

The risk associated with the subject matter of insurance is known as physical hazard, as opposed to moral hazard (see letter M). An example of physical hazard could be the type of material of a building (all wood and thus a fire risk?) or the type and use of a vehicle (a sports car used for racing?).

Pleasure Craft Insurance

Insurance for private pleasure boats covering both the hull and contents plus extensions for third party property damage and bodily injury.

Pluvius Insurance

’Pluvius’ means ’rain’ in Latin. You might guess that this term refers to Weather insurance. Rain can ruin outdoor activities, as we all know. In some cases, this may also mean a reduced profit or an actual financial loss if the outdoor event in question is major.

Political Risks

An exporter may wish to cover the risk of not being paid for his goods due to a sudden turn of political events such as civil wars or misappropriation by government authorities.

Pollution Exclusion

Liability policies would normally exclude pollution damage that was not sudden and accidental from the insured’s point of view. In fact, in this environmentally conscious age insurers watch this risk very carefully.

Premiums

The monetary consideration payable once or periodically by a policy owner to an insurance company in return for the insurance coverage provided.

Premium Adjustment

Some forms of insurance, such as Workmen’s Compensation, Consequential Loss and Stock covers, can be taken out initially based on estimated values, at a deposit premium. At the end of the period of insurance, actual values at risks are declared and the premium adjusted accordingly.

Products Guarantee

This refers to insurance against legal liability for claims which arise from the failure of your products to perform as they are supposed to. For example, the cost of replacing faulty products or the consequential losses arising from the faulty products can be covered under this insurance. But this is not a widely available form of insurance and it is not included in the standard Products Liability policy.

Products Liability

Liability to third parties arising out of goods supplied, for example, if someone falls sick after consuming your food product. This is an exception under a Public Liability policy and therefore to cover for this, you need to be separately insured or have your Public Liability policy extended.

Products Recall

Under certain circumstances, you can insure the costs necessary to recall a product series which has been found to be defective. An example would be a car manufactured.

Professional Indemnity

This protects the professionals, such as accountants, solicitors, architects, doctors, etc, against their legal liability to compensate third parties who have sustained some injury, loss or damage due to their professional negligence.

Proposal Form

A proposal form is an application form to be filled in by any one who wants to take out insurance; he or she is then known as the proposer. This is the basis of the insurance contract. The proposer must disclose all relevant facts known to him or her, or which he or she ought to know. If the proposer fails to disclose such facts, he or she may find the policy virtually useless when the hour of need arises.

Pro Rata Cancellation

If a policy is cancelled before its full term, the insured will receive a full proportional refund of the premium for the unexpired term. But insurers are usually entitled to charge a higher ’short period’ rate depending on the circumstances of cancellation.

Protection and Indemnity Insurance

This is insurance for a ship owner against liability for loss of life, illness, injury, passengers or crew and liability for property damage to the cargo, piers or docks, caused by the insured’s negligence. This type of insurance is usually undertaken by mutual associations called P & I Clubs.

Proximate Cause

Insurance law requires the insured to show proof that the loss was caused by a peril covered by the policy. For instance, a fire destroyed property in a yard and weakened a surrounding wall. On the next night, a gale blew down the weakened wall. What, then, was the ’proximate cause’ or the nearest real reason, for the wall’s collapse - the fire or the wind? Here, the proximate cause would be deemed to be the wind, while the fire was only the remote cause.

Paralysis/ paraplegia

The complete and permanent loss of use of both arms or both legs, or of one arm and one leg, through paralysis caused by illness or injury persisting for at least six (6) months from the date of trauma or illness.

Public Liability

You can use this type of policy to insure your business against legal liability for bodily injury to third parties or loss of, or damage to, the third party property.

Public Utilities

Failure of public utilities, such as electricity or water supplies, can be particularly disastrous for some types of business and cause substantial loss of profits. In such cases, Public Utilities Extensions are available under Consequential Loss insurances.

Punitive Damages

These are also known as Exemplary Damages. They are levied by courts of law to punish a defendant for acts of gross negligence. Although this is a concept usually exercised in US courts, some states there make it illegal to insure against such damages, to make sure the perpetrator is punished without insurance protection.

Policy Loan

A loan made by an insurance company to a policy owner of a part or all of the cash value of the policy assigned as security for the loan.

Pre-existing condition

A coverage limitation included in many medical and health policies which states that conditions or illnesses that exist before the effective date of a medical and health policy, for which the insured is still receiving treatment or shown symptoms will not be covered under the policy. It doesn’t matter whether or not the insured is aware of this condition.

Primary pulmonary arterial hypertension

Means Primary Pulmonary Arterial Hypertension with substantial right ventricular enlargement established by investigations including cardiac catheterization, resulting in permanent physical impairment to the degree of at least Class III of the New York Heart Association (NYHA) classification of cardiac impairment. Pulmonary arterial hypertension resulting from other causes shall be excluded from this benefit. The NYHA Classification of Cardiac Impairment for Class III and Class IV means the following:-
III. Marked limitation of physical activity. Comfortable at rest but less than ordinary activity causes symptoms.
IV. Unable to engage in any physical activity without discomfort. Symptoms may be present even at rest.

Q

Quota Share

A form of reinsurance indemnifying the ceding company against a fixed percentage on each risk. For example, a ceding company may agree to retain 30% on every risk and cede the remaining 70% to its quota share reinsurers.

Qualifying/Waiting Period

Most medical and health policies contain a waiting period for illness and disease, which means that eligibility for benefits under the policy will only start, says 30 days as the waiting period after the effective date of the policy.

R

Radioactive Contamination

Refers to loss or damage directly or indirectly caused by, or arising from, ionizing radiations or contaminations by radioactivity from any nuclear fuel or nuclear waste. It is usually excluded from all relevant policies.

Recital Clause

This is a clause included in all insurance policies. It principally refers to the proposal form and declaration which form the basis of the contract, and formally incorporates these items into the policy.

Reduced paid-up

A paid-up policy with a lower value of sum assured compared with the initial sum assured purchased. A policyholder with a policy that has acquired a cash value can opt to stop paying future premiums and convert his/her policy to a reduced paid-up policy.

Reinstatement by Insurers

Policies relating to the insurance coverage of property commonly state that the insurer may choose to pay for, repair or reinstate the property in the event of its loss or damage.

Reinstatement Cover

This is cover for buildings and machinery where no deduction is made for wear and tear in the event of a claim.

Reinstatement of the Sum Insured

Not to be confused with reinstatement. Most contracts of indemnity usually state a sum insured. If a claim occurs, this sum insured is usually diminished by the amount of the claim, so automatic reinstatement is desirable, subject, of course, to additional premium.

Reinsurance

Under this system, one insurer accepts insurance from another insurer. There are various types of reinsurance, as there are specialist reinsurance companies and brokers.

Rejection Risks

In certain countries, especially the US, import regulations with regard, particularly, to frozen foods are very stringent.
Any imports which do not meet the required standards are rejected, and cover is sometimes available against the risk of such rejection.

Removal of Debris

This can be quite a costly item if there is serious damage to property. It is generally insured either as a separate item under a Fire Policy or up to a certain percentage of the sum insured.

Renewal Notice

This is a form sent to the insured advising him or her that the policy renewal date is approaching and inviting renewal on payment of a stated premium. This invitation is extended on the basis of information that the insured has already given to the insurer.

Reinstatement of policy

Revival of a policy that has lapsed within a period of time under certain conditions.

Replacement-as-new

Household Contents insurance cover is available where an item lost or destroyed may be replaced with a brand-new replacement. Obviously, the total sum insured would also have to reflect this replacement-as-new cost. Also referred to as ’New for Old’ cover.

Res Ipsa Loquitur

This Latin phrase means ’the thing speaks for itself’. It refers to a legal liability situation. What it means is that in cases where the cause of an accident lies solely within the control of the defendant, the plaintiff does not have to prove negligence - in other words, the facts of the case speak for themselves.

Retention

This is the maximum liability that an underwriter is prepared to assume as his own. He may then reinsure the balance of the risk, or just accept the risk up to the retention only.

Retrospective Rating

Retro rating for short, this is a method of establishing premium and is charged and adjusted depending on the actual loss experience.

Rider

An attachment to a policy that modifies its conditions by expanding benefits.

Riot

You can extend a Fire or Loss of Profits policy to cover damage caused by riot and civil commotion as an Additional Peril. Such a peril is defined as ’the act of any person taking part together with others in any disturbance of the public peace, or the action of a lawfully constituted authority in
suppressing such an act’. Strike cover may also be included.

Risk Control

This is virtually a science now, encompassing many methods of reducing the frequency or severity of losses, including loss-prevention measures, such as fire extinguishing apparatus or burglar alarms.

Risk Financing

The use of several methods, or sources of funds, to pay for losses. Can the company stand a large deductible on its insurances? Should some risks be self-insured, perhaps.

Risk Management

A management discipline which seeks to protect the assets and profits of a company by various methods, such as risk control and risk financing.

Robbery

Implies the use or threat to use violence in taking someone else’s property. Some very old Burglary policy wordings may specifically mention robbery and hold-up, but this cover is included in modern Theft insurances.

Running Down Clause

Under Marine Hull insurance, if the insured vessel collides with another and payments have to be made for damage, loss of use and delay to the other vessel, then underwriters will only pay three-fourths of that amount.

S

Salvage

This means about the same as it does in ordinary layman’s language - to save damaged property for further use, thereby reducing the amount of any loss.

Salvage Charges

The expense of recovering property by a salvor. In Marine insurance, these charges would be properly apportioned between hull, the vessel itself, and cargo interests, in the event of a ship being salvaged.

Scale of benefits

The scale of benefits refers to the amount of compensation payable by an insurance company in the event of injury to or loss of limb, sight or hearing. It determines the proportion of compensation vis-à-vis the loss suffered.

Sea-worthiness Admitted Clause

Included in a Marine Cargo wording and exempts the policy holder from vouching for the sea-worthiness of the vessel. If you own a boat and take out Hull insurance then it is warranted that it is in proper condition, but as a purchaser of cargo insurance you have no control over the ship’s condition, although you can, to a certain extent, choose on which ship you send the goods.

Self Insurance

Some large industrial concerns prefer to set aside their own funds to cover any future losses, rather than insure with an outside insurer. It is a step which should never be taken without the benefit of professional advice first. Whilst day-to-day losses might not prove too much of a
financial burden to a really large company, a truly catastrophic event, such as an earthquake, could put it out of business for lack of insurance.

Severe cardiomyopathy

An impaired function of the heart muscle, unequivocally diagnosed as Cardiomyopathy by a cardiologist, and resulting in permanent physical impairment of at least Class III of the New York Heart Association`s classification of cardiac impairment. The diagnosis has to be supported by echocardiographic findings of compromised ventricular performance. The NYHA Classification of Cardiac Impairment for Class III and Class IV means the following:-
III. Marked limitation of physical activity. Comfortable at rest but less than ordinary activity causes symptoms.
IV. Unable to engage in any physical activity without discomfort. Symptoms may be present even at rest.
Cardiomyopathy directly related to alcohol or drug abuse is excluded.

Self Inflicted Injury

Excluded under Medical insurances as this is intentional and not accidental.

Single Article Limit

This is a limit often imposed on All Risks policies for jewellery and household effects, stating the maximum amount allowable for any one item.

Slander

It may seem odd that insurance is available against such a deliberate act as libel and slander, bur a limited insurance market does exist, normally for the large corporations.

Solvency Margin

The ratio by which assets exceed liabilities and are, to some extent, a yardstick of financial health of an insurance company. In many countries legislation exists to set minimum standards.

Special (or Additional) Perils

The collective term for risks which are commonly added to a Fire policy, such as storm, flood, earthquake, etc.

Specified Working Expenses

Factors in the calculation of gross profit under a Business Interruption policy, such as raw materials, packing, carriage and other variables. ’Working expenses’ may also include wages if they are insured as a separate item.

Spontaneous Combustion

Some goods, such as copra or coal, can spontaneously heat and catch fire, when stored in bulk. Under a standard Fire policy, damage to such goods is normally excluded, unless specifically requested. However, any damage resulting to other property from such a fire is covered.

Sprinkler Leakage

Cover for property damage caused by unintentional discharge from an automatic sprinkler system. A Fire policy can be extended suitably and this is important cover to take out if your premises have a sprinkler system. Consequential losses can also be high and you need also to review whether liability for damage to third party property is necessary and adequate.

Standing Charges

These are expenses which still have to be met in full even if a business cannot earn its full income owing to fire or other damage.

Statute of Limitations

Period of time within which claims against third parties for damage or injury have to be made.

Storm

You can cover damage caused by storm as an Additional Peril on a Fire policy. It is to cover damage caused by abnormal weather conditions, not damage attributable to poor maintenance or wear and tear, such as a leaking flat roof. So when you claim, it has to be clear that the storm
was indeed the primary cause of the damage.

Strict Liability

This is a liability for which the client need not prove a breach of duty owed. It is a liability imposed by law, where the defendant will be considered liable even when he has exercised reasonable care.

Subrogation

This term refers to the right which a person or company has to stand in the place of another and benefit from his or her rights and remedies. If an insurer pays a claim caused by the fault of someone else then the insurer will seek to recover the amount in the name of the insured.

Subsidence

This problem, caused when the ground under a building moves downward, often because it has dried out too much, has to be specifically included as a peril under a Fire insurance.

Sue and Labour

This clause under a Marine Hull policy allows the insured to recover the cost of his or her reasonable efforts to avert or minimize a loss.

Sum Insured

The amount stated under the policy and the maximum claim that will be paid out.

Strata-titled property

Properties such as apartments, condominiums, flats etc.

Stroke

Defined as a cerebrovascular accident or incident producing neurological sequelae of a permanent nature, having lasted not less than three months. Infarction of brain tissue, hemorrhage and embolization from an extra-cranial source are included. The diagnosis must be based on changes seen in a CT scan or MRI and certified by a neurologist. Specifically excluded are cerebral symptoms due to transient ischemic attacks, any reversible ischemic neurological deficit, vertebrobasilar ischemia, cerebral symptoms due to migraine, cerebral injury resulting from trauma or hypoxia and vascular disease affecting the eye or optic nerve or vestibular functions.

Surgery to aorta

The actual undergoing of surgery via a thoracotomy or laparotomy to repair or correct an aortic aneurysm, an obstruction of the aorta or a dissection of the aorta. For the purpose of this definition, aorta shall mean the thoracic and abdominal aorta but not its branches. Angioplasty and all other intra-arterial, catheter based techniques, keyhole or laser procedures are excluded

Surrender

To give up a life policy. The insurance company pays the insured the cash value, if any, which the policy has built up if it is surrendered.

Surrender value

The amount available in cash upon voluntary termination of a policy before it becomes payable on death or maturity. Also called cash value.

Systemic lupus erythematosus with lupus nephritis

Refers to a multi-system, autoimmune disorder characterized by the development of auto-antibodies, directed against various self-antigens. Within the context of this policy, SLE is restricted to only those forms of systemic lupus Erythematosus, which involve the kidneys (Type 111 to Type V Lupus Nephritis, established by renal biopsy). Other forms such as discoid lupus and those forms with only hematological and joint involvement are specifically excluded. WHO Lupus Classification:
• Class I: Minimal change glomerulonephritis
• Class II: Mesangial glomerulonephritis
• Class III:Focal Segmental glomerulonephritis
• Class IV:Diffuse glomerulonephritis
• Class V: Membranous glomerulonephritis

T

Target Risk

’The big one’. This is an insurer’s term for a large, sometimes hazardous risk. Such a risk may well be the biggest on a schedule of risks and may therefore have to be treated separately in order to arrange reinsurance to cover it fully.

Tariff

A premium rate, often established by a rating body representing the majority of insurers. Theoretically, statistics can be gleaned from a wider cross section, therefore a fair premium can be worked out. Tariffs tend only to exist in protected insurance market’s rather than in areas of free competition.

Temporary Disablement

Benefits payable under Personal Accident policies where disability is short-term, measured in weeks, as opposed to permanent. Quite often, a waiting period, like a time excess is imposed before claims can be made. Temporary disablement can be total or partial.

Temporary Removal

An extension to the standard Fire policy to cover property temporarily removed from insured premises for repair, cleaning or some other stated reason.

Tenants Improvements

Renovations and improvements that you make to rented premises need to be insured by you. They will not be covered by the building owner because they are your interest.

The conclusive diagnosis of a condition that is expected to result in death of the Life Insured within 12 months. The insured must no longer be receiving active treatment other than that for pain relief. The diagnosis must be supported by written confirmation from the appropriate specialist and confirmed by the Company’s appointed doctor.

Territorial Limits

Do also check these under your Public Liability policy to make sure they are not restricted if you need cover overseas. There may be other geographical limits to consider under All Risks policies, for example: even if cover is stated as ’worldwide’, this would normally exclude North Korea, Laos, Cambodia.

Terrorism

Fire insurance, even if extended to cover riot cover, can exclude ’terrorism’, which is normally defined as the use of violence for political ends. The term ’terrorism’ usually also includes any violence intended to put the public in a state of fear. A limited market does exist for this specialist cover.

Theft Insurance

This is a vital part of any modern insurance programme. You would be amazed at the variety of possessions, products and commodities that thieves apparently find attractive.
Don’t forget that even ordinary office premises nowadays contain sophisticated and expensive machines likely to attract thief’s unwelcome attentions. Theft insurance on business premises usually limits cover to incidents involving forcible or violent entry to, or exit from, the premises.
A wider form of cover, known as Full Theft Cover, which waives this restriction, is available for certain trades.

Third Party Liability

Exactly the same as Public Liability Insurance, involving three parties - the insured as first party, the insurer as second party, and the other person involved as third party.

Three-Fourths Collision Liability

Under Marine Hull insurance, this clause covers liability for damages to another vessel caused by the negligence of the insured vessel. This cover, which is supplementary to the cover on the vessel itself, covers up to three quarters of the extent of liability. The last quarter of the amount is included in the ship owner’s P & I Club cover.

Time-on-Risk Charge

Premium charged for a period during which an insurer is holding a risk covered, by means of a temporary cover note, for example, rather than an annual policy.
It is important to note that, if you take out an initial cover note but then a short while later change your mind and decide to change your insurers, or your policy, you will still have to pay the first insurer pro-rata for the time you have been insured with him since he issued you a cover note.
As far as the insurer is concerned, you have been covered for that time, whether you have been paid or not, and whether or not you are still arguing about details of the cover. Had you claimed during that time, he would have honoured your claim.

Time Policy

This is one of the various types of Marine insurance policies.
A Time policy is more common for Hull insurance and refers to cover for a fixed period, usually not more than 12 months.

Tort

A civil breach of personal duty owed to one’s fellow citizens in general, as opposed to a breach of contract. The injured person has the right to damages from the wrongdoers.

Total Loss

The complete loss or destruction of all the property insured under a particular policy. Under Marine insurance, it is quite common to find a Total-loss-only insurance.

Travel Insurance

Nobody should leave home without it, yet the vast majority of travellers do. Quite a few different covers are available, including Personal Accident, Medical, Loss of Luggage and Money, and Personal Liability.

Turnover

The money earned for goods supplied or services rendered.
Insurers need to have this statistic when managing earnings-related insurance such as Business Interruption or Products Liability, where it is a rating factor.

Twisting

The act of, or attempted threat, which induces a policyholder, to drop an existing policy and take another. A policyholder is usually worse off when his/her policy is twisted.

U

Umbrella Liability

Term used mainly in the US market describing a liability policy where the limits of liability are in excess of the amount covered under a primary policy. It can also fill in gaps in cover such as a Difference in Conditions/Difference in Limits policy in the UK market.

Under-Insurance

A condition in which not enough insurance is purchased to cover the insurable value.

Underwriter

An insurer’s employee who decides whether or not to accept a proposal or insurance and, if so, on what terms and conditions.

Underwriting Agency

An intermediary who is allowed to underwrite and accept risk on behalf of an insurer, subject to certain laid-down criteria and limits.

Uninsurable Risks

There are many different types of insurance cover available, but some things are just uninsurable. For example, if you are a cocaine-smuggler, you cannot expect any insurer to give you cover against the possibility of arrest and detention.

Uninsured / Untraced Drivers

The Motor Insurer’s Bureau, collectively financed by all motor insurance companies, in some countries deals with third-party injury claims arising from uninsured drivers and hit-and-run accidents.

Unoccupancy

Some policies have a condition that premises should not be left unoccupied for more than a specified time. Premiums are set for a risk with a stated occupation and unoccupancy can result in an increased hazard.

Unspecified Valuables

Collective cover for valuable items such as jewellery, which are individually worth less than a certain specified limit.
This cover saves having to individually specify each item, and if evidence of value is provided, the claim can be made up to the specified limit.

Utmost Good Faith

A duty imposed upon both parties to an insurance contract, the insured and the insurer. This legal duty implies that both parties must make full disclosure of all the facts relevant to the insurance contract before entering into it. In other words, tell the truth to your insurer, who should also make
sure you are informed of the terms and conditions of the insurance.

V

Valuations

Claims are much more easily and satisfactorily handled if you have valuations. With buildings, of course, you have to look at rebuilding costs rather than market value, as you do not insure the land. With other property, such as jewellery, it is equally important to keep valuations up to date.

Valued or Agreed Value Policy

This provides a pre-determined fixed amount to be paid out for the total loss of the property. Not a very common policy unless you are a collector of fine arts or vintage cars.

Variable Charges

Those expenses which vary in direct proportion to business activity or volume of production, and which are included as ’specified working expenses’ when calculating the sum insured under a Business Interruption policy.

Void and Voidable

A contract is considered legally void, that is invalid, if obtained by fraud or if the contract is deemed to be a bet. A contract is voidable on the other hand if it can be avoided by the aggrieved party. He can get out of the contract if there has been a breach of utmost good faith.

Voyage Policy

Marine insurance covering goods for as long as they are moving from one place to another, as opposed to a Time policy where cover is simply for a definite period of time.

W

Waiting Period

A period of time which must lapse after, say, the inception of a disability, before benefits become payable. Commonly found in permanent Health insurance policies.

Waiver

A rider waiving (excluding) liability for a stated cause of injury or sickness or a provision or rider agreeing to waive premium payments during a period of disability of the insured.

War Risks

Excluded under standard policy forms. In Marine insurance, it can be readily included subject to cancellation provisions. In non-marine insurance, war risks tend to only be covered in a specialist market. Insurers are always wary of selection against them. In other words, why should they grant cover if hostilities look likely when the insured did not request cover when there were no problems.

Warehouse to Warehouse

This cover is quite usual under any Marine Cargo policy covering goods moving from the manufacturer’s premises to the consignee’s warehouse at the final destination.

Warranty

A policy condition which, if not complied with, may have the effect of invalidating the whole policy. An example is the requirement to use a burglar alarm in a jewellery shop.

Wear and Tear

Policies exclude this sort of damage. It is not accidental but inevitable with most goods.

Whole life insurance

Life-long protection and premiums are paid throughout your life and the money including any bonuses will be paid when you pass away or suffer total and permanent disability.

With Average

Marine Cargo insurance term where cover includes partial losses. The term is now obsolete since the introduction of the Institute Cargo Clauses.

Worker’s (Workman’s) Compensation

See Employee’s Compensation. Payment to employees injured at work under a scale of benefits set down under Statutes in various countries.

Y

Yacht Insurance

Available under Pleasure Craft Insurances. Special provision needs to be made if you race them.

York Antwerp Rules

The treaty adopted by most major countries to determine adjustment for general average in Marine Insurance.